1)On January 1, 2016, P Corporation sold equipment with a 3-year remaining life and a book value of $40,000 to its 70% owned subsidiary for a price of $46,000. In the consolidated workpapers for the year ended December 31, 2017, an elimination entry for this transaction will include a:

a) debit to Equipment for $6,000.

b) debit to Gain on Sale of Equipment for $6,000.

c) credit to Depreciation Expense for $6,000.

d) debit to Accumulated Depreciation for $4,000

2)Patriot Corporation owns 100% of Simon Companys common stock. On January 1, 2017, Patriot sold equipment with a book value of $350,000 to Simon for $500,000. Simon is depreciating the equipment over a ten-year life by the straight-line method. The net adjustments to compute 2017 and 2018 consolidated income would be an increase (decrease) of:

a) 2017, ($150,000); 2018, $0

b) 2017, ($150,000); 2018, $15,000

c) 2017, ($135,000); 2018, $0

d) 2017, ($135,000); 2018, $15,000

3)In January 2014, S Company, an 80% owned subsidiary of P Company, sold equipment to P Company for $990,000. S Companys original cost for this equipment was $1,000,000 and had accumulated depreciation of $100,000. P Company continued to depreciate the equipment over its 9 year remaining life using the straight-line method. This equipment was sold to a third party on January 1, 2017 for $720,000. What amount of gain should P Company record on its books in 2017?

a) $30,000.

b) $60,000.

c) $120,000.

d) $180,000.

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